Impact of Revenue Allocation and Agitation for Resource Control in Niger Delta Area

Impact of Revenue Allocation and Agitation for Resource Control in Niger Delta Area

CHAPTER ONE

INTRODUCTION

 1.1   Background to the Study

 Federalism has its essence in two organically related issues. These are power sharing and resource allocation. The former defines the political essence of federalism while the latter underpins its fiscal dimension. Over the years, the fiscal dimension of the federalist practice has been quite problematic in Nigeria. In effect, fiscal relations within the context of the Nigerian federation is said to have been characterized by systematic defects which have given rise to dysfunctions and crises.

One significant dimension of the fiscal relations problematic in Nigerian federalism has been the question associated with the issue of resource control. The issue of resource control is as old as the Nigeria federation. In the 1950’s for instance, the tendency was manifested in the fashion of interregional controversies over the acceptable revenue allocation principles and formulae.

In more recent times, the problem of resources control has not only persisted, but it has been rather politicized by different opinions. The insistence of the oil producing states of the Niger Delta on the principle of derivation as the yardstick of revenue allocation in Nigeria is better understood within this matrix. Incidentally, the bulk of the existing literature on Nigeria’s fiscal federalism has only paid attention to the fundamentals of resource control and inadequate resources for States to develop their areas.

For instance, Attah (2002), Dafinone (2005) and Ilagha (2007) have tended to support the politics of resource control on the basis of ownership of resources by a particular region rather than advocating for true fiscal Federalism that will promote the unity of Nigeria. In effect not much has been said in the existing literature regarding the basis and logic of the resource control within the ambit of the politics and crisis of revenue allocation in Nigeria.

The issue of resource control has at different times pitched the federal government against its federating units. This has been clearly demonstrated by the “Niger Delta Debacle” which has turned out to be the most controversial issue in the Nigerian federation at the present.

The basis of the resource control activism is perceived by some Nigerians as the marginalization of the federating units by the overbearing federal government, particularly in matters of fiscal relations. While others their argument on the overbearing influence of the federal government on matters of fiscal relations is not enough justifications for either resource control or increase resource allocation to certain area.

Impact of Revenue Allocation and Agitation for Resource Control in Niger Delta Area

There is therefore, a controversy on efficient and equitable fiscal relations in Nigeria between the different levels of governments. Viewing the positions arising from the different opinions on this issue, the present study is a departure from the common and frequent arguments on the issue. It is rather interested in the examination of revenue allocation in Nigeria and the extent to which these revenues have been utilized for public good in one of the federating units- Niger delta.

The study with empirical data generated from both primary and secondary sources reveals an inefficient and ineffective utilization of resources to the key sectors of the state economy. As a result of this, Niger delta government’s responsibility to its people in terms of economic development from effective resource utilization between the periods of 1999-2007 did not reflect the realities of accountability and transparency.

1.2.   Statement of the Problem

 The study is an attempt to examine the problem of revenue or resource allocation and utilization in the Nigerian federation using Niger delta as a focus of study. In recent times, federating states have renewed agitations for either resource control or increased revenue from the center to facilitate development at State. This agitations seem to suggest that revenue allocation to States is inadequate for the development of basic infrastructure at the State level.

This gives rise to the present research in Niger delta base on the level of poverty, infrastructural decay and social disconnect in the State and other States in the Niger Delta in spite of the huge financial inflow into the States. It is the combination of poverty and the huge financial income and the consistent agitations for increased resource allocation that necessitated this research. Therefore, the study examines the extent to which the revenue of Niger delta was utilized for certain key sectors of the economy. This will brings out the rationale if any, for the agitation for either resource control or a review of the revenue formula.

It is important to state that most extant works on fiscal federalism in Nigeria have tended to overemphasize the issue of resource control and /or power sharing (Douglas, 2001; Guyu 2003) than revenue utilization. There appear to be little or no interest on the issue of resource misallocation and fiscal responsibility in discussing revenue sharing in Nigeria.  This study takes these issues as a point of departure and investigates the interface between fiscal federalism and resource management and utilization in Nigeria from the stand point of Niger delta, 1999-2007.

Specifically the study seeks to address the following fundamental problems;

1. What is the nature of fiscal relations in Nigeria?
2. What is the place of resource management/utilization in Niger delta?
3. Does the practice of fiscal responsibility in Nigeria fulfill the principle of fiscal responsibility?
4. What are the problems and prospects of resource management/utilization in Niger delta?

Impact of Revenue Allocation and Agitation for Resource Control in Niger Delta Area

1.3  Objectives of the Study

1. To examine the nature of fiscal federalism in
2. To investigate the place of resource allocation and uitilization in Niger delta federating state.
3. To ascertain whether the practice of fiscal federalism in Nigerian fulfills the ideals of fiscal responsibility and efficiency.
4. To examine problems and prospects of efficient resource allocation and ultlization in Nigeria with particular reference to Niger delta.

1.4 Significance of the Study

 The existing literature on fiscal federalism in Nigeria have tended to over emphasize the issue of resource sharing and control at the expense of the fundamental question of efficient resource utilization and management. This study has critically examined some of the issues on fiscal relations and has contributed significantly by renewing the call for the review of the existing revenue allocation formula in Nigeria to favour the federating states in order to foster development at the rural areas where majority of the citizens live.

Also, The study is of significant because it has carefully departed from the politics of resource control which is based on sectional agitations and examine the utilization of resources in one of the states which is seen as a replica of other states in Nigeria.

The study has equally brought out clearly the level of revenue allocation in Nigeria using Niger delta as a case study. Based on the realities discovered in the study, the research is clear about the level of malutilization through the misapplication of resources in Niger delta. Similarly, the study emphasized the place of the political elites in governance in Nigeria.

Besides, it is expected that the findings and recommendations made by the study will serve as valuable inputs to policy makers in the endeavors towards moving the Nigerian federation forward. Overall, it has enriched the existing literature on the subject matter towards the goal of cumulative advancement of knowledge.

1.5 Basic Assumptions

The study is carried out within the following postulates;

1. Fiscal indiscipline especially at the state level is at the root of the crisis of resource utilization in
2. Lack of efficient revenue allocation and utilization mechanisms and practice have been the bane of governance in Niger delta.
3. Fiscal responsibility is a necessary requirement for good governance in Nigerian federation.

1.6  Scope and Limitation of the Study

 The study addresses its subject matter within the context of contemporary Nigerian federalism with reference to the period of 1999-2007. It focuses on Niger delta as the case study. The reason for choosing this period is to capture and appraise the impact of democratic process vis-à-vis the subject matter.

Within the above context and time frame, the study interrogates the politics of resources utilization and fiscal responsibility with a view to ascertaining its significance, problems and prospects.